The warning by Frank Dobson, the Labour spokesman on employment, came as officials from the Department of Employment confirmed that the long-term jobless in Britain could face further cuts in benefits.
People out of work for a year will risk losing social security benefits if they refuse to attend Job Plan Workshops, assessment courses lasting a week to help them find work or places on other government schemes.
Officials confirmed that the schemes will be mandatory. At present, people out of work for more than two years may lose 40 per cent of their benefits if they refuse to join Restart counselling courses. Cuts in benefits will be extended to those out of work for 12 months. Gillian Shephard, the Secretary of State for Employment, presented the additional pounds 200m - an increase of 1 per cent in real terms - as a boost for training, which she had won in the Chancellor's Autumn Statement.
Labour MPs failed to realise that there would be coercion for the long-term jobless to join the Job Plan scheme. Mrs Shephard's department is also reviewing the idea of introducing 'workfare' - the system under which the unemployed lose benefit if they do not accept a work scheme - although she is reported to be against it.
The Government insists that the aim is to increase the numbers taking up the job or training counselling schemes, rather than to save money on benefits.
Mrs Shephard said her review would lead to 1.5 million training opportunities targeted on the long-term unemployed and those particularly disadvantaged, such as the disabled, former prisoners, former members of the armed forces, or those involved in mass redundancies.
Opening a Labour debate highlighting the plight of the unemployed, Mr Dobson recommitted Labour to a policy of aiming for full unemployment.
'With the neo-fascists stamping around in Italy, murderous neo- Nazis stamping around in Germany, their counterparts in France and Spain on the move, mass unemployment must be tackled now Europe-wide,' he said.
'The democratic parties must address the problems of unemployment before the unemployed transfer their loyalties, their disillusionment and their anger, elsewhere.
'That is why getting Europe back to work should have been top of the agenda for the European summit. Theological discussions about subsidiarity should have given place to creating jobs.'
Mrs Shephard said the Labour motion for the debate was 'out of date, irrelevant and wrong'. She had chaired the social affairs council in Brussels last week at which employment ministers, for the first time, discussed the unemployed as a result of the UK presidency's employment resolution initiative.
Earlier, John Smith, the Labour leader, challenged John Major during Prime Minister's Questions in the Commons about the failure to put unemployment at the top of the agenda for the Edinburgh summit on Friday.
Mr Major said there would be a discussion about the economy - although he did not say it was planned to discuss it over lunch, rather than in the main conference talks.
'I very much hope that negotiated measures emerge,' he said.
Mr Smith said: 'The obligation on being president is more than interesting discussions. It is action that is required. Why is it that all the suggestions, more investment facilities for the European Investment Bank, infrastructure projects for transport and emergency action on unemployment, have all come from others and nothing has come from the presidency?'
Mr Major replied: 'You are mistaken, as you will find from the presidency paper this weekend.
'You are desperately trying to recover your European gloss after the shameful way you and your colleagues have been behaving over the Maastricht Bill.'
Labour's motion for the debate deplored the rising tide of unemployment with its intolerable cost, condemned the Autumn Statement for its 'total failure' to tackle the jobs crisis when it was rising faster than anywhere else in the EC and warned it was forecast to rise above 3 million. It was defeated by 309 votes to 276, a Government majority of 33.
The Government's amendment, emphasising the need for the UK economy to remain competitive at a time of world recession and welcoming the package of 1.5 million employment and training opportunities, was approved without a vote.Reuse content